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“In our Press Release on 8 August, we mentioned how US consumer spending data did not support the notion of a sudden US spending boom, and that the spike in Transpacific volumes in May and June 2024 was likely driven by a front-loading of imports,” said Alan Murphy, CEO of Sea-Intelligence.

Recent US inventory data for June 2024 from the US Census Bureau further reinforces this view. Data shows that U.S. retailers have been steadily building up inventories, suggesting that the growth in container imports is largely being used to build inventory rather than reflecting a surge in consumer spending.

 

US inventory by Category

Source: Sea-Intelligence

 

Figure 1 illustrates inventory levels across three categories defined by the U.S. Census Bureau: Manufacturers, Retailers, and Wholesalers. Retailers, in particular, have been steadily building up their inventories, with a notable acceleration recently.

When compared to the long-term trend that began in 2009 (excluding temporary dips during the pandemic), recent months show an upward bias—about $18 billion more than would be expected based on trends.

Additionally, the inventory-to-sales (I/S) ratio shows that retailers’ inventory growth is outpacing actual sales. It has been rising since late 2022 and is now approaching the wholesaler ratio.

While this inventory buildup is not necessarily cause for concern, it could be due to importers pre-loading goods due to concerns about potential strikes at US East Coast ports later this year. Another possibility is that importers are preparing for potential new tariffs, as trade relations with China are expected to be a focus in the upcoming US presidential election.

“Irrespective of the reasons, if history over the past five years is any guide to go by, we are poised for a significant inventory increase over the last months of 2024,” commented Alan Murphy, CEO of Sea-Intelligence.

 

Source: Phaata.com (via Sea-Intelligence)

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